US raises tariffs on Chinese chips as trade war ramps up

5 days ago

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The US plans to double the tariffs on Chinese semiconductors, but is also increasing tariffs on EVs, solar cells, batteries and critical minerals.

The US has announced a series of stronger tariffs aimed at various Chinese components and products, as economic tensions between the two countries continue.

US president Joe Biden has announced tariff increases across various “strategic sectors” that will be implemented over the next couple of years, impacting the trade of EVs, semiconductors, batteries, critical minerals and more.

In a statement, the US White House said these tariffs are designed to protect US workers and companies from China’s alleged “unfair trade practices” and to encourage China to eliminate these practices. China said it “firmly opposes” these new tariffs and that it will take “all necessary actions” to protect its interests, CNN reports.

Among the actions, the US plans to double the tariff rate on semiconductors from 25pc to 50pc by 2025. This is a key sector of contention between the two countries, as the US has issued sanctions on the export of chips to China in recent years.

Meanwhile, the US has been investing billions of dollars into various projects with chip manufacturers to improve its domestic production of semiconductors. In a statement, the US White House said the raised tariff on Chinese semiconductors is an “important initial step” to protect these investments.

The White House also said China has gained a “growing market share” in this sector and that its capacity expansion risks “driving out investment by market-driven firms”.

“Over the next three to five years, China is expected to account for almost half of all new capacity coming online to manufacture certain legacy semiconductor wafers,” the US White House said.

Broader tariffs

But Chinese semiconductors are not the only products being taxed more harshly by the US in these new measures. For example, steel and aluminium products are having their tariffs raised from 0-7.5pc to 25pc this year. Chinese EVs will see their tariffs grow from 25pc to 100pc this year, while solar cells will have their tariffs doubled to 50pc this year.

The White House claimed China’s practices have given it control of the majority of global production for “the critical inputs necessary for our technologies, infrastructure, energy and healthcare”.

Tariffs are also being raised on medical products, ship-to-shore cranes, batteries, battery components and critical minerals.

“We will continue to work with our partners around the world to strengthen cooperation to address shared concerns about China’s unfair practices – rather than undermining our alliances or applying indiscriminate 10pc tariffs that raise prices on all imports from all countries, regardless whether they are engaged in unfair trade,” the White House said.

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Leigh Mc Gowran is a journalist with Silicon Republic

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